166: How to Build a Billion Dollar Mobile Gaming Company From Scratch, with Holly Liu of Kabam

Holly Liu, Co-Founder, Kabam

Level Up With Holly Liu

Holly Liu knows a thing or two about building empires. Not only did she and her co-founders grow their startup, Kabam, into a powerhouse mobile gaming company, but she also led the design of one of the most popular empire-building games, Kingdoms of Camelot.

That franchise alone has grossed more than $250 million and topped the charts in the App Store.

From there, Kabam went on to create hits like Marvel Contest of Champions and The Hobbit before selling most of its assets to a South Korean gaming company for an estimated $800 million.

It took a few pivots and a lot of hard work, but Liu has built up an impressive gaming empire with popular games beloved by loyal fans.

“How could people not like games?” Liu says. “That’s how humans learn.”

Level One

While Kabam is known as a mobile gaming company today, that’s not how it started. In 2006, Liu and three other co-founders launched a corporate social networking company. As Liu puts it, they were “young kids” and “many of us, honestly, had never managed a person in our life.”

On top of that, they were first-time founders. “It was surprising anybody was going to give us money,” Liu recalls. “But somebody did, and they took a chance on us, and we failed horribly.”

Seven months and three product iterations later, they had only about 1,400 users.

“And that was after we were begging our friends and family to sign up,” she says. “I guess some people call it spamming.”

First Pivot: Facebook Communities

The young startup founders had learned a lot in those several months in the trenches together, and rather than disband, they looked for their next opportunity. Meanwhile, a new kid on the block in the social networking space was growing like wildfire. Its name was Facebook.

“That’s when we realized that instead of bringing the users to where you are, maybe we were better off going to where the users were.”

That’s when Kabam made its first pivot: from corporate social networking to building Facebook fan communities.

How did their new product work? If you were, for example, a fan of a TV show like Grey’s Anatomy, you could use Kabam’s app to discover other fans of the show and list quotes on your profile page.

This time, the idea took off. The app grew to 60 million users and was one of the largest communities on Facebook, so large in fact, that when ABC wanted to distribute video on Facebook, they didn’t call Facebook—they called Kabam.

That growth was a huge win for the fledgling startup, but just as things were starting to look up, the U.S. economy took a nosedive. The mortgage crisis in the United States turned into a global financial crisis, and Liu’s company, like so many others, took a big hit. At the time, Kabam was ad supported, and “the money just dried up overnight.”

“People were pulling back money,” Liu recalls. “For us, we lost, like, a $3 million contract within days.”

So Liu and her co-founders went back to the drawing board. They had two options: return what money they had left to their investors and attempt to find jobs in an unstable economy, or look around for an opportunity to pivot again.

Second Pivot: Facebook Gaming

They opted to look for another chance to pivot. And what they found was an industry that appeared to have a lot of market opportunity: gaming. Companies like Zynga that were building games, particularly on Facebook, were doing quite well. Liu saw a market that seemed “almost recession proof.”

“They were just killing it with Farmville,” she says.

Then Liu and her team turned their focus inward. What were the team’s core competencies? They had already proven their skill and knowledge in building Facebook apps and together had almost 100 years of combined app development experience.

Next, they realized the CEO had a real passion for games—he just didn’t like what was available on Facebook at the time.

That was it: a market opportunity ripe for the picking, deep knowledge in that space, and passion to boot.

Kabam decided to take on Facebook games by creating something deeper than what Farmville had to offer. They called their first product Kingdoms of Camelot, a strategy-based empire-building game, the first of its kind on Facebook.

What made Kingdoms of Camelot unique? “It was the first time that Facebook people could talk to people outside of their friend circle,” Liu explains. “So you weren’t stuck just, like, gifting a purple cow to your friends and family.”

The game’s real-time chat opened up communication across Facebook and allowed people to make meaningful connections with others who shared an interest in gaming. “In many ways, it became a little bit of a discovery platform for people, and we really ended up anchoring a lot of our competitive advantage of being social and learning about community.”

Some of Kabam’s users became lifelong friends after meeting through the game, and some even met their spouses through it.

On all counts, Kabam’s foray into gaming was a success. Liu and her team dug in and got really good at user acquisition. Because of the growing market, buying users was inexpensive at the time, allowing Kingdoms to grow quickly.

But then Kabam took another hit: Facebook decided to start charging developers a 30 percent fee.

“We knew very quickly it would do great damage to our business,” Liu says. “So we rallied the whole company around, ‘How can we expand past Facebook?’”

And that’s how Kabam set its eyes on its next frontier: mobile gaming.

Third Pivot: Mobile Gaming

By this time, Kabam had grown to about 400 people. “It was actually quite difficult to get a lot of focus, to be honest,” Liu says.

They sent their co-founder to China, tasked with the mission of building a mobile team to create a new version of Kingdoms. Upon accomplishing both tasks, Kabam ushered in a new monetization model of in-app purchases, which allowed the game to become profitable, fast. By 2012, the mobile version of Kingdoms of Camelot was the highest-grossing in the App Store.

When drawing new users started to get more expensive, Liu and her team had to find ways to reduce their customer acquisition costs.

“Once you figure out your lifetime value of a customer, then you can go and figure out … how much can you reduce that cost of acquiring the customer,” she says. “So we spent a lot of time, and we realized quickly … that you cannot grow just by buying traffic.”

Liu and her team realized it was much better to be featured in the App Store or Google Play store, so they dedicated a team to making sure their relationships with both companies were good.

Their next move was to partner with Hollywood. This allowed Kabam to accomplish two important things. First, it gave them greater brand recognition, which reduced their customer acquisition costs. Second, it gave them access to a wealth of existing characters and storylines, so Kabam didn’t need to create new intellectual property.

One of the products that came out of this partnership was Marvel Contest of Champions, a fighting game between Marvel characters that would become one of Kabam’s top games. For Liu, a special moment was when Marvel asked Kabam’s Vancouver studio to create a new character for the Marvel universe. “Her name is Guillotine; I’m so proud it’s a woman.”

Achievement Unlocked: The $800 Million Exit

In 2016, Kabam sold the brand and a major portion of its assets to South Korean gaming company Netmarble, for a deal reportedly worth up to $800 million, and later sold the remainder to FoxNext, 21st Century Fox’s new gaming division.

“We did something a bit unique,” Liu explains. “We kind of broke up the company, if you will, and sold a piece of the company. So bought the brand Kabam; they bought the Vancouver studio as well as anything that supported Marvel.”

The other parts of the company were its central services and LA studio. “That was bought by FoxNext,” she says. “That was a very good kind of merging of the two, mainly because they had been working on our Avatar IP, which is obviously owned by Fox. … It makes a lot of sense.”

The founders did not stay at Kabam, and Liu flew to Australia to work with Girl Geek Academy, which encourages more women entrepreneurs to launch startups.

“I’ve been definitely looking to give back to the entrepreneur communities,” she says. “Given the lack of women in entrepreneurship, particularly tech entrepreneurship, I’ve been definitely looking to make an impact there as well.”

The Quest to Become a Successful Founder

When Liu and her team started their company in corporate social networking, could they ever have guessed they’d achieve such monumental success in the gaming industry?

“I think what was actually most important was, we were not from the gaming space,” Liu says, “and that became our advantage, because we were able to be okay with many things.”

Coming from the web development world, Liu and her team were very service-oriented, giving them a fresh perspective in the gaming industry. “That mindset of the web world is very much that things are never done. … You fix bugs and it’s most important to ship because you know it’s never going to be done. … So for us, what we did is we really kind of looked at people who are very passionate about games as well as our service backgrounds.”

Originally hired as Kabam’s designer, Liu went on to wear many hats, from leading the HR team (where she helped grow the staff 500 percent and open more than six offices around the world) to leading a game team. “I think that’s a bit of a job of a founder in many ways—to do what’s needed for the company to grow.”

Despite getting her start outside of gaming, Liu’s passion for the work is clear. “It’s an amazing, amazing calling,” Liu says, “especially mobile gaming. You get to be with people 24/7 in the most intimate times of their lives, and you get to impact how they view culture … and you get to help create relationships with people that they’ve never had before.”

For founders looking to level up their games, Liu recommends a book that had a special influence on her: The Founder’s Dilemmas by Noam Wasserman. Wasserman highlights a common dilemma: Do you want to be king or do you want to be rich?

Liu explains that companies that want to be king tend to be control-oriented, bringing fewer people onboard and sticking to a vision. On the other hand, companies that want to be rich raise a lot of capital to capture the market, aiming to hire the best talent and grow the pie as big as possible.

“My biggest recommendation for co-founders is to be on the same page on whether you want to be rich, or do you want to be king,” Liu says. “We ended up in one camp where we raised a lot of money, so that we could get the very best talent, so that we could grow the pie as big as possible for as many people to share, and … all of our actions were locked up in that.”

She might not have been aware of it at the time, but looking back, it’s clear to her that was their orientation.

“Many of the steps that were chosen, it was always a push to keep on growing, to return the capital, to expand our market share, and never letting our foot off the gas.”

Beyond figuring out that distinction, does Liu have any other advice for aspiring entrepreneurs?

“I think one of the most important things is, if you’re really thinking about entrepreneurship, the best thing to do is to just go ahead and move forward and just honestly do it,” she says.

“You could talk about it, you could read a lot of books about it, and it’s a very scary thing, but I liken it to riding a bike. You just kind of have to get on and do it so that you can learn.”

3 Lessons From Holly Liu’s Successes

Given Liu’s entrepreneurial successes, are there any business hacks we can learn from her? Here are the top three.

Go where the users are Liu and her team learned this the hard way. After spending seven months on their corporate social networking company, they had only about 1,400 users. Instead of continuing with a dud, or giving up on entrepreneurship completely, the Kabam team went to where the users were: Facebook. Their pivot to building Facebook communities helped them reach 60 million users.

Know your core competencies After building successful Facebook communities, the Kabam team had 100 years of combined experience in Facebook app development. So they rode that strength into the Facebook gaming space, helping them to launch a $250 million franchise with Kingdoms of Camelot.

Follow your passions Before their pivot to the Facebook gaming space, Liu and her team realized their own CEO had a huge passion for gaming, though he didn’t like what was available on Facebook. That passion helped spark the creation of their first Facebook game.

Key Takeaways

What opportunities lie within the mobile gaming industry

How to take your business where the customers are

How to pivot when your first, second, and even third ideas fail

What goes into making a product as viral as possible

Why you should look to grow your company through the power of partnerships

How to make being social your competitive advantage

Full Transcript of Podcast with Holly Liu

Nathan: Hello and welcome to another episode of the “Foundr” podcast. My name is Nathan Chan and I am the host of the “Foundr” podcast and also the CEO and publisher of “Foundr Magazine” also foundr.com. Hope you’re all having an awesome day wherever you are around the world. It’s currently 2:30 a.m. for me and I am getting my grind on hustling it out Gary V. style.

Jesus, this is just one that I’m actually procrastinating with recording these videos. I’m working super hard right now guys. I’m creating so much content. It’s insane and we’re only getting warmed up. Yeah, we actually need to hire more people. So if you know anyone that might be a good fit or you’d love to join us and you are in Melbourne, I want to be very, very clear we are looking only to build out the team in Melbourne at the moment.

But if you are in Melbourne and you would like to join us and we’re on a mission to building a household name entrepreneur brand that impacts the lives of tens of millions of founders and entrepreneurs on a weekly basis. If that does sound interesting to you, if you would like to learn and join our team, we are looking for a few different roles copywriter, designer, CRO person in Melbourne so I would love…we’ve got a killer team. We’re doing some really game-changing stuff. It’s really disrupting.

And, you know, people said that magazines are a dying trade. We’re trying to challenge people on that. We’re doing all right. So I just want to say thank you so much for taking the time to listen and let’s talk about today’s guests.

Her name’s Holly Liu, incredible founder and she’s the founder of a company, a co-founder of a company called Kabam. And they’re a gaming company which is really interesting. I haven’t interviewed anyone that’s disrupted the gaming industry but Holly’s out of…she comes out of Silicon Valley and we met in person. My friend, Greta, introduced me to her, incredible founder, built a billion-dollar company, and, yeah, really really inspiring founder.

There’s a lot to learn. She has a totally different mindset. The guys in San Fran, they seem to have a really different mindset and you’ll see what I mean when you listen to this. And we talked about everything growth, scaling, hiring, product. She comes for a product development program manager background so a lot of gold here. I know you guys are gonna love this one. Holly’s a really really smart person. She has a lot of great experiences and lessons to share.

And if you guys are enjoying this, please do take the time to leave us a review on iTunes helps us beat time. And also please do share this with your friends and make sure you subscribe. The more you subscribe, you don’t miss an episode. All right, guys, that’s it from me. Now, let’s jump on to the show.

All right. So the first question that I ask everyone that comes on is how did you get your job?

Holly: Or find my career? So let’s see. I don’t know. I think being an entrepreneur and being a founder is not necessarily something you get. I always think it’s like one of the easiest things to do. You don’t go to school for it. There’s no certificate. There’s nobody that’s gonna double you. You just, kind of, go and do it and it’s one of the easiest things to get into but one of the hardest things to be successful if you really think about it in terms of an entrepreneur.

Eventually, you know, when you start running a company hopefully your success…you get to some level of success that, you know, there’s other people that come on board and start building their company. At that point, I think, being an entrepreneur it means to be super flexible yet also being very kind of aligned to some visions and values to be loyal to them and committed to them. So I’ve actually worn many hats at our company. We ran for…or I was there for about 10 years from the beginning until exit.

I was their first designer for quite some time led the design and then as it got bigger, we needed some founder talent to go run people in the HR team. So the CEO asked me to go and run that, and as a result, I was able to help grow the culture even grow the people over 500% in terms of employee growths and open up over six offices around the world. So I don’t think I would have gotten that opportunity if I was very much, kind of, thinking about what it was to be a founder an entrepreneur in terms of a job and finding it, if you will.

But my background has very much been in the design field and I had a job in the career working as a designer and finding that was very interesting and a journey in and of itself in terms of not only just finding the area that I was interested in. I initially started in accounting of all places. Found out very..

Nathan: Oh wow.

Holly: I know. Found out very quickly, I was not an accountant. Not that that’s a terrible professional. It just wasn’t something that I wasn’t made to do and I ended up going back to school and that’s when I learned about human computing interaction which is many people call “product design” and that’s when I just fell in love. I love merging technology with humans and seeing how we interacted. It’s very much what tech entrepreneur does. Oftentimes people ask me what is the most difficult thing about our journey in terms of tech entrepreneurship and, I think, it’s always changing people’s behaviors their minds and their feelings. And that could be from employees within as well as folks who are using your product.

It is very hard to change user behavior but that’s something that I was very fascinated with. And in design, was how could I help people achieve certain things that they didn’t even know that either they wanted or made their life a lot easier. And that’s, kind of, how I ended up finding…I found some jobs and product design oftentimes through job boards or networking. But once I decided to become an entrepreneur, I think, that was just very different. I didn’t necessarily think as much about jobs and much more about caretaking the business and growing the business and what did it take. So that’s probably how I ended up wearing many hats and doing many different jobs.

Nathan: I see. So Kabam is the first company that you founded or did you do something before it?

Holly: No, this is the first company I founded. I found it with three other co-founders. So there was four of us total and we started in about 2006. Kabam was known as a mobile gaming company today but we didn’t quite start out that way. We started out doing corporate social networking so it’s very different. It was what would call B2B business and we were four folks from the consumer we’re young kids…many of us honestly had never managed a person in our life.

We were first-time founders. It was surprising anybody was going to give us money but somebody did and they took a chance on us and we failed horribly. Our first foray into corporate social networking. But from that, we learned a lot and we had to learn very quickly. The main thing we learned that after seven months and three product iterations, we only had about 1,400 users and that was after we were begging our friends and family to sign up. I guess some people would call it spamming your friends and asking them to send it to their friends and it just wasn’t growing.

And at that time, Facebook was launching their platform, they developed a platform and that really grew very quickly for many other app developers. And, I think, that’s when we realized that instead of bringing the users to where you are, maybe we were better off going to where the users were. So that’s when we iterated into…or pivoted is probably a much stronger word, into building fan communities on Facebook for TV shows and sports teams.

So if you were a fan of a TV show like “Grey’s Anatomy,” you can come into our app, you can find other fans, you could just post on your profile page, and we grew that business to over 60 million users. And it was one of the largest fan communities on Facebook. So that when…ABC was a big television network in the U.S. wanted to distribute video on Facebook, they actually didn’t call up Facebook, they called us up because they said, “You know what? We want our fans to be watching this. You guys are the ones that have the largest fan base.”

Unfortunately, happened for us, we’re still not even to the gaming company part of it and how we got into gaming is that, unfortunately, in the U.S., we had a big mortgage crisis, which turned into a big financial crisis and a lot of the companies whose business models like ourselves was ad-supported, the money just dried up overnight, like people were pulling back money for us. We lost like a $3 million contract within days.

So, we were really looking kind of…we were just really seeing, “Wow. This is not much left in terms of runway,” and we decided, you know, like, “What should we do? We could return the money? We could try to find a job in this horrible climate,” but we decided to…we were looking around and we realized there was a lot of market opportunity for companies that were building games and particularly games on Facebook, people like Zynga.

And they were just killing it with Farmville. So, the first thing that we looked at and I noticed this with almost every, kind of, pivot that we made is we looked a lot of what we call market opportunity. I think that’s from the first lesson that we learned is, you know, where are the people, what is something that is growing financially or people wise. And Zynga was almost recession-proof.

The second thing we usually look at is what we call our core competencies. So, us as a team, we’re about 30 people but we grew up with the Facebook platform, building on it and really building successful applications, so we had almost a hundred years of Facebook app development experience. We felt confident about building apps and then finally we definitely looked at our passion points, you know.

And the CEO was incredibly passionate about games. He just wasn’t passionate about what was currently on Facebook, and so he said, “You know what? What if we were going to build a game that was much, you know, deeper than this, deeper than what was offered by Farmville.” And that’s when we came out with our first game called “Kings of Camelot” and that was our flagship product. I’ve led the design on that and that really kind of put basically our temple into games and started our foray into games. That franchise has grossed over $250 million alone and for us that’s been able to fund the rest of the company in many ways. And that’s how we got our, kind of, hooks into gaming, if you will.

Nathan: Yeah, wow. So, before we move on to the story, because this is really fascinating, How did you keep your investors happy? What did they say when you guys pivoted?

Holly: Sure, that’s a very good question. Investors are definitely one of our big, kind of, shareholder. So, our first pivot from corporate social network into fan communities, it was really funny because we were left with the decision of returning the money or what little runway we had, or maybe going into Facebook. And I remember when our CEO came back, I said, “So, what did our investors say?” Because there was only one at the time of the board and he goes, “Yeah,” She said, “Do it. Go to where the users are.” And I think that really, kind of, solidified our DNA as, kind of, you know, in terms of, like, the marketing piece.

And, I think, early on, that was incredibly helpful. I talked to our investor and she always says, “Well, I feel like my role is to hold…” I go, “You must have thought we were so silly, like why would we keep on working on this thing when there could be something over there?” And she said, “Well, I feel like my job is to hold a mirror to the entrepreneur and so that they can see where it’s going.”

I think as we kept moving towards getting into later pivots, I think, the first thing is that you have to be really honest with your board in many ways in terms of like, “Look, this is where we’re seeing the business going.” If you’ve already made that decision particularly as a CEO, you have to be honest and you have to be 100% committed because you’re gonna have to sell the pivot to the board, to the employees, to your direct reports.

So, you have to be like a hundred percent committed to it. And then so committed that you have to sell even when you’re like, “I just don’t know.” And, I think, that’s probably one of the hardest things as a CEO out there. I don’t envy it. It’s a tough job. And so, that’s the first thing, I think, you have to be honest.

And then the second thing is you really have to paint the vision for what you see in the marketplace or where the new direction is going. It’s maybe not marketplace for us. We were very anchored on market opportunity and, kind of, sell them on like, “Hey, this is where I think we should be going into. This is the plan. This is why I think we are the best ones to be doing.” It’s almost like you’re pitching all over again but not really. But this is where I think we can go and look at how much opportunity there is over here and this this opportunity is dying. And that’s how it, kind of, got sold to us even as employees and to the employees, so everybody’s on the same page so you can make that shift together a lot easier.

Nathan: I see. So, what happened next?

Holly: After kind of the pivots or after…?

Nathan: Yes. So, like, you had your first successful game. Like, how did you guys even like work out? Like how to build an awesome game that people love?

Holly: Yes, so, I think, the one thing that was super unique about us, there was a couple features that was incredibly unique when it comes to games on Facebook. It was the first time that Facebook people could talk to people outside of their friends’ circle, so, you weren’t stuck just like gifting a purple cow to your friends and family. The second thing is…so, because we had what we call real-time chat so we’re able to connect with people who were loved games but maybe weren’t in your friends’ circle.

So, in many ways, it became a little bit of a discovery platform for people and we really ended up anchoring a lot of our competitive advantage of being social and learning about community and, kind of, how to do community, right? So, people would basically…people become lifelong friends from our games and have met and married on our games. So people are actually building like real live relationships here.

As we, kind of, move forward, what we started thinking is like, “Can we replicate this success?” So, we started seeing, like, how can we replicate the success and how do we do it faster. I think we learned a lot from that. I think we learned that you can’t just…I think humans know…they’re very intuitive. They know when something’s the same but just dressed up differently. So, I think, for a while we ended out a strategy that probably wasn’t the best but we learned a lot.

On top of that, what we ended up learning very quickly which led us to kind of an evolution because for us the evolution is that we ended up on mobile. We started on Facebook. We’re probably the only Facebook gaming company to really successfully move to mobile. We ended up realizing very early on because our games weren’t as “viral,” so it wasn’t so easy to get your friends or your mom to play Kingdoms of Camelot, is that we realized very quickly that we could buy traffic and it was very cheap because a lot of people weren’t doing that.

And so we would buy the traffic. We got really good at UA or just user acquisition and it’s much easier to do user acquisition when the markets are growing because you can kind of get things for very cheap, if you will, unexpensively and really grow. And that’s really where you see a lot of these apps for these games or any types of things just like, “Like how do they massively grow?” I think part of it is the platform is growing and we have growing platforms. It helps all boats rise.

But we got really good at it. So good that when Facebook said, “Hey, we’re gonna enact a 30% tax on developers.” We knew very quickly it would do great damage to our business, so we rallied the whole company around how can we expand past Facebook. And obviously, mobile was there. And by this time, our organization had grown to probably about 400 people. We had about three offices.

It was actually quite difficult to get a lot of focus to be honest. So, what we did is we parachuted the co-founder into China and we said, “Mike, you need to build a mobile team and you need to build a mobile version of Kingdoms of Camelot.” And I think that focus of sending them out there was super helpful. He was able to build a team and build the game. And by 2012, we were the top grossing app in the App Store. And so, it made more money than any…and then Facebook, Pandora, it was the top. And that really was the first time that an in-app purchase game was sitting there and really ushered in in-app purchasing.

So, I do think the third kind of fundamental, kind of, uniqueness innovation that we really did bring to the west was the business model of games just for folks who aren’t familiar with games. It’s traditionally been on console and you usually buy this game to play on your Xbox and it’s shrink-wrapped in plastic, but once you open up that, you cannot return it. So, you pay your 40 bucks up front and that’s what you pay for, whether or not you like it or don’t like it. It’s very much like going to the movies and not being able…like, you don’t like the movie, they’re never gonna give your money back and you just wasted two hours of your life.

We like in our games a little bit closer to TV and how TV is made and a little thought about. Our monetization model is a little bit different. We do monetize directly our players, so that we can build a direct relationship with them. But basically, it’s games as a service as in in-app purchase. So, we think about building a game with kind of like seasons, episodes. We talked a lot about releasing content and, kind of, what that looks like, what’s the content roadmap, because it’s gonna be lasting for in perpetuity.

So, our Kingdoms of Camelot franchise is still making money and being played today. That’s from 2009. So, it’s pretty amazing, kind of, some of the longevity of franchises and these games that you can make. And that’s, kind of, what we did in terms of being able to, kind of, really come push things forward.

So now, we have a whole new kind of business model in-app purchases now instead of every game making $40, you could capture such a wider audience, some people, some players in your audience who want to pay a lot more money, and there’s some who will want to pay less money, and you get a capture those kind of tail-ends of things.

And the greatest thing for me, what got me really excited being a product designer from my training is that I really love the idea that I could co-create the game with a player. That players can continue to make suggestions and you can…the game was just never done or will show something that I thought was just super fascinating. And as a result, you have a lot of data and now you can see how players react to things. And that’s super exciting. It’s super different for the gaming industry.

Before, there used to be religious fights on a console game, what is fun, no, this is more fun, that’s more fun. And it’s only like five people but we used to say, “Look. Now, we can see fun.” You know? If you know people don’t return to your game, we used retention as the metric to say, “How fun is the game?” because we assume that if people don’t come back, maybe they don’t find your game fun enough, right? Barring any technical difficulties and all of that, right? And so that’s kind of what we would, kind of, talk about a lot and, kind of, how we pushed a lot of things forward.

Nathan: Hmm. I see. So, after, you know, you did Kingdoms of Camelot and you got it on mobile and did really, really well, what happened next?

Holly: Yeah, sure. So, things change really fast and same with the mobile industry. What would happen in terms of the mobile industry is things consolidated really quickly. It became super expensive to buy traffic, which is what we, kind of, grew very quickly early on. And so what we started finding was how…which almost any business will look towards is how do you reduce your costs of acquiring a customer?

Once you figure out your lifetime value of the customer, then you can go and figure out, “Okay, how much can you reduce that cost of acquiring the customer?” So, we spent a lot of time and we realized quickly with where the mobile space was changing and where it, kind of, is today. Actually, I’d say there’s not much movement. Is that you cannot grow just by buying traffic, you know. The top 10 have been the top 10 for a really long time. It’s very hard to break into that. You can try to spend boatloads of money which some companies have done and try to get push and buy traffic all the way to the top, but it’s still not enough.

Right now, even in today’s space, we learned really quickly that it was much better to get featured by Apple or Google, so we had a dedicated PD team to really kind of make sure that the relationships really good with both of those companies. On top of that, what we also, kind of, found a little bit of our forte and what it is today is, you know, we say, “Hey, we build like AAA quality games on your mobile phone.” Is that we started partnering with Hollywood a lot.

We had some of the best partnerships with Hollywood and that really lended to, A, allowing for brand recognition, so we can reduce the cost of customer acquisition. Secondly, it also derisked a lot of things, so, for example, our top game right now which is called “Marvel Contest of Champions,” is a fighting game between Marvel characters. It’s a lot like Street Fighter but using Marvel characters.

The second thing affords you is if you choose the right IP partner is you can have a lot of great access to wonderful characters as well as storyline. So, it, kind of, opens up this whole world where you don’t run the risk of having to create your own IP in some ways, and you can really kind of work together. What’s been very fascinating with our Marvel relationship which has been really good is usually the way IP works is they make a movie like Marvel and then the IP moves into kind of like TV, if possible, and then toys and maybe onto your cereal. And then if you’re really lucky, you create a game.

And, really, for us, I think, what we’ve found a couple of things is A, we also…what’s been fascinating around licensed partners getting into mobile games is now the fan can engage with the IP 24/7. We are in the most intimate parts of the player’s life. We’re on their mobile phone and they’re playing with it. It’s like it’s in your pocket. So, for the IP, fans can interact with them at any given time.

At the same time, this is the first time for us that I’ve seen something flip, you know. If we’re lucky, it gets to a game. But when Marvel wanted to come out with a new character, they actually went to our Vancouver Studio and asked them to design and create a whole new character for the Marvel Universe, and they did it. Yeah, they did it for Contest of Champions and her name is Guillotine. I’m so proud of…it’s a woman. And there’s a compliment put out about her as well, so now it went all the way to, you know, the comic books.

So, it’s really, kind of, fascinating where the IP is getting its inspiration and how they’re partnering together with games instead of being kind, of, an afterthought, they’re now like much more of a forethought and maybe even pushing and creating IP. And you see that in the world…I think World of Warcraft came out with a movie. And there’s some bigger IPs that are just gaming IP that started as a game that are going into movies or to books or the other way. So, it’s really fascinating.

Nathan: Yeah, that’s really interesting. So, you’ve brought us to the end of this, like, kind of, the end of your story, so where…was Kabam sold or…?

Holly: That’s right. Yeah, so Kabam was sold to a South Korean gaming company called “Netmarble.” Netmarble wanted a portion. They basically wanted Marvel Contest of Champions. That was something that was extremely profitable if you removed all, kind of, the costs together and just focused on the people that worked on that. So, we did something a bit unique.

We, kind of, broke up the company, if you will, and sold the pieces of the company, so they bought the brand Kabam. They bought the Vancouver Studio as well as anything that’s supported Marvel and they’re coming out with transformers. So, definitely if you’re a Transformers fan, you definitely wanna play that. Yeah, I’ll just do a little plug.

And then the other part of the company was more on central services. We also had our LA studio and that was bought by FoxNext. That was a very good, kind of, merging of the two, mainly because they’ve been working on our Avatar IP which is obviously owned by Fox. So that’s kind of how and this kind of recently happened in February of this year.

So, that’s been kind of where it’s at in terms of some of its new owners. And what’s super exciting is Netmarble does another game called “Marvel Future Fight.” So, now they, kind of, get to own all the Marvel fighting space and then as well as with Fox because they do an Avatar. It’s been really kind of nice. It makes a lot of sense.

Nathan: Yeah. Well, that’s so cool. So, do you still actively work in Kabam or, yeah, what’s next?

Holly: Yeah. So, me and the founders did not need to stay at Kabam. So, I’ve ended up going to Australia for a while. I know we met for about five weeks working with Girl Geek Academy to get more, kind of, women entrepreneurs, kind of, helping them start startups. I’m very interested in obviously making impact and I always talk about, “Hey, if anything that we’ve learned in our last 10 years of mistakes and if anybody wants to learn from them, I’m more than happy to share them.”

So, yeah, I’ve been definitely looking to give back to the entrepreneur communities and even more particularly given the lack of women in entrepreneurship, particularly tech-entrepreneurship. I’ve been definitely looking to make an impact there as well.

Nathan: Yeah. No, that’s amazing. So, we have to work towards wrapping up, but this is a really, really fascinating story. So I’ve got a ton of questions. I was taking notes along the way.

Holly: So, I’ll have to take follow-up.

Nathan: Yes. Nathan: So, incredible journey, a lot of twists and turns along the way. When you guys started, did you ever anticipate that you would build something of that size?

Holly: So, we never anticipated but it was certainly our goal. That’s for sure. Like, when I look back, I think, we were certainly aligned around certain goals. And a lot of people ask me, what’s a book I recommend and they always recommend this book. It’s called “The Founder’s Dilemma” by Noam Wasserman if you’re a founder and it goes through… He basically looks at a lot of startups and he like kind of captures the founder’s dilemmas at each point.

There’s a lot of dilemmas that founders have to go through and one of them was that…that what he’s known for in capturing these dilemmas. Do you want to be king or do you want to be rich? Neither is bad but if you optimize for both, you’re never going to reach any of them. So, being rich is basically companies that tend to raise a ton of capital, so that they could capture the market. They’re much more interested in bringing the very best talents on board, which obviously requires capital. And they’re interested in growing the pie as big as possible.

Being king tends to remain a bit…they want to be more control oriented. They don’t really let as many people on the board. They have a certain vision that really needs to stick to it. And you have examples of both of these companies. But, in the book, they definitely capture it. I felt like it captured us so well and my biggest recommendation for co-founders is to be on the same team like same page on whether you want to be rich or you want to be king.

We ended up in one camp where we raised a lot of money so that we could get the very best talent, so that we can grow the pie as big as possible for as many people to share. And that was definitely all of our actions were locked up in that. If you were to ask me that like 10 years ago, I’m not too sure if I would have been able to tell you that. But now looking back I’m like, “Wow, every single…” like many of the steps that were chosen it was always a push to keep on growing, to return the capital, to expand our market share, and never letting our foot off the gas.

Nathan: Yeah, I see. And were you head of product essentially?

Holly: So, at one point, I was head of a game for a GM. For a very short time in the beginning, I was definitely head a product and we brought on a product manager. Again, I’ve worn many hats. I’ve been mainly mostly in the design side, run a game, game team for a bit, and then ran HR, and bobbed in and out of corporate services from chief of staff to many things.

Nathan: Yeah. Wow. Awesome.

Holly: Many, many hats. I think that’s a bit of a job of a founder in many ways to do what’s needed for the company to grow.

Nathan: So, what I’m curious around from your product design experience is you had no background in developing games. How did you work out like besides the data piece like was it always the data that they kind of…

Holly: Sure.

Nathan: …because that’s a bit of an art form, right? Like, developing a great game.

Holly: Yeah, so I think it’s a little bit of both. I think that what we heavily leaned on was not just that passion of a few people in our company. They just like loved games and said, “Hey, this is what I feel a great game is.” I think what was actually most important was we were not from the gaming space and that became our advantage, because we were able to be okay with many things. Particularly the very first thing is we were very service oriented. So, that is an incredible mindset.

We all came from the web world and that mindset of the web world is very much that things are never done, right? Like, you’re probably always installing patches, things are never done, you fix bugs, right? And it’s most important to shift because you know it’s never gonna be done. I worked in a company called AOL and they were having a hard time trying to shift from like, “Okay, we need to have everything on the CD and it’s done.” So, everything had to be perfect. But the biggest problem with that is you never know if you’re polishing a turd. That’s what I always say, like you could just be sitting there and it could be polishing…so you don’t have to release things, if you will.

So, for us, what we did is we really kind of looked at people who are very passionate about games as well as, kind of, our service backgrounds. Now, I will say that there is a bit of luck involved. We have a very low success rate. Like, our hit rate is on average, like, decent. It’s like 10%, right? But that’s like industry average when it comes to games. So, it’s not it’s that every single game you put out there, it’s gonna be a hit. That’s for sure. We’ve had a lot of failures along the way even after we created our first hit. We thought we could keep doing it and that’s not necessarily true.

So, I don’t want to sound cavalier at all in terms of like, “Oh, yeah. We knew every single secret formula and making games is super easy.” It’s not. It’s one of the hardest pieces of entertainment there is. And for the people that choose to go into it or those who…it’s their calling. It’s an amazing, amazing calling, you get…especially mobile gaming, you get to be with people 24/7 in the most intimate times of their lives. And you’re gonna impact how they view culture, how they…and you get to help create relationships with people that they’ve never had before, never would have known while having fun. Amazing, all of this stuff all together.

Nathan: Yeah. It’s very relaxing, isn’t it? Gaming, right?

Holly: Oh, no. It’s not. Are you kidding me? Definitely not the industry. The industry is not relaxing. It’s definitely a lot of work there, intense, very intense. But, yeah, some games are…when you play them, you should either feel relaxed or some people like to play the type of games that help they achieve. There’s many different motives, but people… I always say this. There’s many people who do come up to me and say, “I’m so sorry, Holly. I just don’t like video games.”

And I always tell them, I say, “It’s not because you don’t like video games. It’s just because you haven’t had a game made for you yet.” And like I’m just…how could people not like games? That’s how humans learn, right? I mean that’s just how we are. So, it does speak to a bit of like the lack of diversity honestly in the gaming industry, a lack of diverse voices, male, female, different countries, cultural, all those types of things. I just refused to believe that people don’t like video games. Just don’t think games…they haven’t had a game made for them.

Nathan: Yeah, I tend to agree. Like, one thing I actually look at when hiring people is are they a gamer or do they play games, because if they are a gamer, they have really good problem-solving skills.

Holly: Oh, that’s interesting. And, I think, when you used to say and ask whether or not they’re a gamer, I will say that phrase is to a certain portion of types of games and those types, they do set up like achievements and quests, and you build a lot of things that are closer to, kind of, the games we’ve built, but there’s definitely…you’re absolutely right. I think playing games like you have to have that flow. Like, that’s the thing as game designers need to get you into that flow of, you know, challenge, yet also fun in terms of relaxing and engaging, right?

Like, too challenging, they’re gonna give it up. Not challenging enough, they’ll give it up. You’re exactly right. Like, problem-solving happens even when you’re a gamer or you’re just somebody who plays games. I get that a lot. I’m like, “I don’t play. I’m not a gamer.” And I’m like, “Yeah, how come your Candy Crush says you’re at level 540?” “Oh, yeah, I do play this.” You must spend a ton of time on there and they’re like, “Oh, yeah. I just play games but I’m not a gamer.” But you’re absolutely right, like solving problems is…you still need that challenge for sure.

Nathan: Hundred percent. So, look, we have to work towards wrapping up, Holly. But two last questions. One, just, kind of, maybe just some words of wisdom, parting wisdom for our audience that you’d like to finish off on and then the last question is best place people can go to find out more about yourself and your work.

Holly: That is such a lofty thing. Words of wisdom, parting words. I think one of the most important things is if you’re really thinking about entrepreneurship. The best thing to do is to just go ahead and move forward and just honestly do it. You can talk about it. You could read a lot of books about it and it’s a very scary thing. But I liken it to riding a bike, you just kind of have to get on and do it so that you can learn, and that’s what the learning is all about.

And if you want to find more about me, you can definitely follow me on twitter my handle is Holly, H-O-L-L-Y, HLiu. So, it’s Holly H Liu, H-O-L-L-Y, H-L-I-U. So, feel free to follow me on Twitter. And you can DM me.

Nathan: Awesome. All right. Well, look, thank you so much for your time, Holly. This is an awesome conversation. I really appreciate it.